This Public Fund Just Bought a Chunk of LCID Stock. Should You?

Daily Trade

2022 was brutal for electric vehicle (EV) manufacturers, and investors of Lucid Group (NASDAQ:LCID) really got slammed. This, however, opens up the possibility that LCID stock is trading at an attractive price point. It certainly adds interest and intrigue that a sovereign-wealth fund recently added nearly $1 billion to its investment in Lucid Group. That’s not the only reason to consider your own position in the stock, though.

Being a contrarian trader can be psychologically difficult. Unless your timing is perfect, you’re bound to buy shares of a stock and watch them lose value for a while. Are you really prepared to invest in Lucid Group and possibly catch a falling knife?

At least one fund is willing to take that chance, it seems. That’s encouraging, as it signals confidence in Lucid Group from some well-heeled investors. So, let’s delve into the details and find out which large-scale shareholders are putting their capital at risk with a stake in Lucid Group.

What Big-Money Fund Just Bought LCID Stock?

As Barron’s reported, Saudi Arabia’s sovereign-wealth fund, known as Public Investment Fund, recently added a nearly $1 billion position in LCID stock. Generally speaking, sovereign-wealth funds allow governments to invest surplus capital.

Is Public Investment Fund applying a “buy low, sell high” strategy here? It’s hard to know for sure. However, the fund is definitely purchasing Lucid shares at a low price, as they’ve been as high as $55 but are currently trading at $6 and change.

By the way, a form filed with the U.S. Securities and Exchange Commission (SEC) confirms that this wasn’t Public Investment Fund’s only purchase of LCID stock. After adding 85.7 million Lucid shares on Dec. 22, 2022, the fund held an astounding 1.1 billion Lucid shares in total.

Lucid Group Makes Progress in Europe

The SEC form doesn’t reveal exactly why Public Investment Fund chose to up the ante with its position in Lucid Group. In other words, individual investors should have their own reasons for buying the shares.

One reason for taking a long position might be the ultra-low price of LCID stock. Another consideration is Lucid Group’s successful capital raise of around $1.515 billion.

On top of all that, there’s Lucid Group’s ambitious foray into the European EV market. In fact, the automaker announced its third retail location in Europe not long ago. It was a momentous occasion as Lucid Group opened a service, delivery and sales center in the Netherlands.

Additionally, Lucid Group recently commenced deliveries of its Air Dream Edition vehicle models in Europe. This truly was a milestone moment as Lucid Group delivered the first Air Dream vehicles to customers in Germany and the Netherlands.

What You Can Do Now

There’s no need to guess why Public Investment Fund took such a large position in Lucid Group. It’s just interesting and encouraging to know that a government-associated fund would believe so strongly in the automaker.

What does this mean for individual investors? It means that LCID stock might be worth owning, even if you don’t have $1 billion to spend. Thus, as Lucid Group ventures boldly into Europe, you can choose to buy a few shares for a long-term position.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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